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This chapter examines the impact of sectoral indebtedness on GDP in Czechia, initially a low-indebted small open economy in which debt dynamics are becoming a major concern. The impact of household debt, non-financial corporation debt and public debt is analysed with the use of local projections based on instrumental variable estimations. The results show a more pronounced influence of household debt compared to non-financial corporation and government debt. Initially, increasing household debt stimulates short-run economic activity, but in the medium run, it limits household consumption and negatively affects output. This negative impact gradually turns into a positive effect in the long run. Non-financial corporation debt has a negative short- to medium-run impact but can have a small positive effect in the long run due to the prevalence of tradable industries. Public debt initially has a short-run negative impact, but then gradually becomes positive. Overall, the findings have implications for macroeconomic policies and the importance of monitoring financial stability.

Our purpose is the examination of the effects of fiscal policy on private lending for the Eurozone countries. The emphasis is on the identification of the time path of government spending and bank lending.

Fiscal policy is a main factor of macroeconomic stability for the euro area economy. This paper, investigates the impact of government spending on bank lending. For this reason, we present a dynamic theoretical model with a perfectly competitive banking sector, estimated using panel cointegration for the Eurozone countries from 2000Q1 to 2022Q2.

Our findings highlight that, in the long run, consistent management of government spending can have a beneficial multiplicative impact on bank lending for housing and business reasons. This finding is stronger in magnitude for business versus housing lending. The high level of homogeneity of our results across Eurozone countries has positive implications for a common fiscal policy in the future. Finally, authorities should know that policy adjustments are quicker in housing lending when compared to business lending.

In this paper, we contribute to the existing literature, concentrating on the investigation of any existence of long-run and short-run relationships between government spending and bank lending. Additionally, our analysis allows one to investigate the contribution of each Eurozone member state in the short-run and long-run model’s dynamics, providing significant outcomes for the implementation of economic policy and the need for fiscal discipline in the Eurozone.

Inflation expectations are an important part of the transmission mechanism of the inflation targeting regime. As such, central bankers must study the inflation expectations of economic agents to anchor them close to the level of the inflation target. However, economic agents are affected by the past and current macroeconomic situation when they form their expectations concerning future inflation. Using survey data on inflation expectations in Czechia, we investigate the macroeconomic determinants of Czech analysts' and managers' inflation expectations. We find that both actual and past inflation have a substantial impact on inflation expectations of the agents surveyed. We also identify backward-looking behaviour among these agents: persistence in inflation expectations of up to two quarters was detected. Moreover, financial analysts formed inflation expectations more in line with economic theory, while company managers evinced expectations similar to those of consumers.

Liquidity is a primary concern for businesses. The purpose of this study is to understand the impact of the collaborative liquidity management within the supply chain. Larger firms prescribe favorable trade terms in the transactions and do not engage in value chain vision sharing with their smaller counterparts. Smaller firms encounter challenges with liquidity and often face the risk of bankruptcy. Such practice can threaten the entire supply chain. Instead, collaborative liquidity management can offer a win–win scenario to both parties. In that case, what are the benefits of implementing a collaborative liquidity management approach across the value chain, and what is the reward?

The authors selected key liquidity metrics that matter most to the organizations from a cohort of 307 firms from the Indian automobile industry for 10 years (2012–2021). The authors classified the businesses into five distinct revenue-based categories. They emphasized the importance of expanded supply chain finance adoption and demonstrated how collaborative liquidity management strategies boosted return on assets.

The research confirms the tangible benefits of greater adoption of supply chain finance in realizing supply chain members’ shared vision. The authors challenged the age-old practice of power-based relationships in the supply chain. They recommended a win–win scenario through practical cooperation and increased adoption of SCF by value chain members.

Existing research predominantly focuses on dyadic relationships and is restricted to Europe and China. According to the authors, no comprehensive investigation has been conducted in India. This application of simulation techniques to improve the liquidity performance of companies in developing economies is innovative.

Serious concerns about the stability of the international financial systems have arisen recently, resulting from the mounting inflation rates and the accompanying procedures to control them. Consequently, this study aims at examining empirically the impact of inflationary pressures/shocks on the stability of banking sectors.

The study adopts a dynamic GMM models and exploits a sample of 188 banks operating in 14 MENA economies, over the period 1999–2021.

This research finds that high inflation does indeed harm bank financial stability and deteriorates banks credit risk. Furthermore, the examination of the impact of interaction terms between inflation and bank-specific and institutional quality variables shows that better capitalisation levels, higher liquidity buffers, larger asset size, greater market power, foreign ownership and overall political stability, all can counterbalance the impact of inflationary pressures on MENA banks financial stability.

In addition to empirically revealing how inflationary shocks can deteriorate financial stability, the main novelty of this research is examining how the interactions between inflation on one hand, and bank-specific and institutional quality on the other, affect bank stability.

Working capital efficiency (WCE) is crucial for the sustainability of both large and small firms. This study aims to use the sample of micro, small and medium-sized enterprises (MSMEs) in India and tries to understand the critical determinants of WCE.

Using a fixed effect panel data model on a sample of 578 MSMEs (59 micro, 226 medium and 296 small firms), this study explores the relationship between the predictors of WCE. Additionally, the study adopted two metrics for measuring WCE among each type of firm (micro, small and medium).

Several firm-specific variables, including leverage (lever), firm age (AGE), firm size (Fsiz), profitability (Prof), extended payment terms (EPT), human capital (HCap), asset turnover ratio (ATR), reverse factoring (RF) and firm growth (FG), have a significant effect on working capital management efficiency (WCE). In contrast, tangibility (Tangib) and salary expenses (Sal) had an insignificant effect on working capital management efficiency.

The study is based on secondary data. Future studies may incorporate some primary data, which will facilitate qualitative analysis.

The studies explore the relationship between WCE and expenses in HCap, EPT, RF and Sal as the predictors for WCE, which was not studied earlier in MSMEs scenario, especially in case of developing nation.

Free banking theory, as developed in Adam Smith’s 1776 treatise, “The Wealth of Nations” is a useful tool in determining the extent to which the “invisible hand of the market” should prevail in regulatory policy. The purpose of this study is to provide a timely review of the literature, evaluating the theory’s relevance to regulation of financial technology generally and cryptocurrencies (cryptos) specifically.

The methodology is qualitative, applying free banking theory as developed in the literature to technology-defined environments. Recent legislative developments in the regulation of cryptocurrencies in the UK, European Union and the USA, are drawn upon.

Participants in volatile cryptocurrency markets should bear the consequences of inadvisable investments in accordance with free banking theory. The decentralised nature of cryptocurrencies and the exchanges on which these are traded militate against coordinated oversight by central banks, supporting a qualified free banking approach. Differences regarding statutory definitions of cryptos as units of exchange, tokens or investment securities and the propensity of these to transition between categories across the business cycle render attempts at concerted classification at the international level problematic. Prevention of criminality through extension of Suspicious Activity Reporting to exchanges and intermediaries should be the principal objective of policymakers, rather than definitions of evolving products that risk stifling technological innovation.

The study proposes that instead of a traditional regulatory approach to cryptos, which emphasises holders’ safety and compensation, a free banking approach combined with a focus on criminality would be a more effective and pragmatic way forward.

The relationship between industrial policy and exploratory innovation is imperfect.

The authors use Chinese high-tech enterprise identification policy (HTEP) as a natural experimental group to test policy impacts, spillover effects and mechanisms of action.

First, HTEP promotes exploratory innovation. In addition, HTEP has a greater impact on non-exploratory innovation. Second, HTEP has spillover effects in two phases: HTEP (2008) and the 2016 policy reform. HTEP affects exploratory innovation in nearby non-high-tech firms, and the policy effect decreases monotonically with increasing distance from the treatment group. Third, HTEP affects innovation capacity through financing constraints, technical personnel flow and knowledge flow, which explains not only policy effects but also spillover effects. Fourth, the analysis of policy heterogeneity shows that the 2016 policy reforms reinforce the positive effect of HTEP (2008). By deducting the effects of other policies, the HTEP effect is found to be less volatile. In terms of the continuity of policy identification, continuous uninterrupted identification has a crucial impact on the improvement of firms’ innovation capacity compared to repeated certification and certification expiration. Finally, HTEP has a crowding-out effect in state-owned enterprises and large firms’ innovation.

This paper contributes to the existing literature in several ways. First, the authors enrich the literature on industrial policy through exploratory innovation research. While previous studies have focused on R&D investment and patents (Dai and Wang, 2019), exploratory innovation helps firms break away from the inherent knowledge mindset and achieve sustainable innovation. Second, few studies have explored the characteristics of industrial policies. In this paper, the authors subdivide the sample into repeated certification, continuous certification and certification expiration according to high-tech enterprise identification. In addition, the authors compare the differences in policy implementation effects between the 2016 policy reform and the 2008 policy to provide new directions for business managers and policy makers. Third, innovation factors guided by industrial policies may cluster in specific regions, which in turn manifest externalities. This is when the policy spillover effect is worth considering. This paper fills a gap in the industrial policy literature by examining the spillover effects. Finally, this paper also explores the mechanisms of policy effects from three perspectives: financing constraints, technician mobility and knowledge mobility, which can affect not only the innovation of beneficiary firms directly but also indirectly the innovation of neighboring non-beneficiary firms.

The authors analyse six actively traded VIX Exchange Traded Products (ETPs) including 1x long, −1x inverse and 2x leveraged products. The authors assess their impact on the VIX Futures index benchmark.

Long-run causal relations between daily price movements in ETPs and futures are established, and the impact of rebalancing activity of leveraged and inverse ETPs evidenced through causal relations in the last 30 min of daily trading.

High frequency lead lag relations are observed, demonstrating opportunities for arbitrage, although these tend to be short-lived and only material in times of market dislocation.

The causal relations between VXX and VIX Futures are well established with leads and lags generally found to be short-lived and arbitrage relations holding. The authors go further to capture 1x long, −1x inverse as well as 2x leveraged ETNs and the corresponding ETFs, to give a broad representation across the ETP market. The authors establish causal relations between inverse and leveraged products where causal relations are not yet documented.